The Ministry of Finance has disclosed that the Ugandan Government is set to allocate up to UGX 24.9 trillion for servicing the country’s public debt in the upcoming fiscal year. This revelation comes following the Bank of Uganda’s report indicating that Uganda’s public debt, as of August 2023, amounted to UGX 88.807 trillion, excluding the additional UGX 7 trillion in loans approved by Parliament in December.
Presenting the 2024/25 National Budget Framework Paper to Parliament’s Finance Committee, Stephen Ojiambo, Commissioner of Accounts in the Treasury Operations, emphasized the government’s focus on timely debt payments to avoid incurring interest penalties. The projection for external amortization expenditure has risen due to significant principal repayments on various projects, including the Karuma power dam, Isimba dam, Kabalega International Airport, Afrexim Budget support, Standard Bank, and TDB budget support.
The Bank of Uganda, in its December 2023 State of Economy report, expressed concern over the escalating public debt, emphasizing its impact on tax revenues. The report stated that for every UGX 100 collected in tax revenues, UGX 32 is allocated to debt service, reducing resources for essential services.
Additionally, the Ministry of Finance outlined plans to inject UGX 197 billion into Roko Construction Company and Lubowa Specialised Hospital, fulfilling the government’s commitments to purchase shares in Roko Construction Company and settling promissory notes for Lubowa Specialised Hospital. The Ministry also earmarked UGX 274 billion for partial payment of reparations to the Democratic Republic of Congo, as ordered by the International Court of Justice.
Basil Bataringaya, MP for Kashari North, raised concerns about the meager allocation of UGX 200 billion for clearing domestic arrears, which currently stand at about UGX 7.7 trillion. He warned that at this rate, it would take around four decades to settle the existing domestic arrears, impacting local suppliers who have provided goods and services to government entities.
Furthermore, the enactment of the Anti-Homosexuality Act was highlighted as a factor contributing to external financial risks and uncertainty for Uganda. The government is actively engaged in negotiations with the World Bank to lift the ban on financing new projects in Uganda.
